ObamaCare Will Now Add To Deficits In First 10 Years

In September 2009, President Obama promised the country that "I will not sign a plan that adds one dime to our deficits — either now or in the future."

But it turns out Obama did sign such a plan — in fact, ObamaCare could add upwards of 180 billion dimes to the deficit in its first 10 years, an IBD analysis of various official budget reports found.

According to the Congressional Budget Office's initial forecast made in March 2010, ObamaCare was supposed to cut the deficit a total of $124 billion in its first decade. Democrats seized on this to show Obama had lived up to his promise.

Almost as soon as Obama signed the law, however, his administration started making changes that added costs and cut revenues. The most recent was the one-year delay in the employer mandate.

The result is instead of a $124 billion deficit cut from 2010 to 2019, ObamaCare will likely add about $18 billion in red ink over those same years. And that assumes nothing else changes in the years ahead.

Costly Delays

When the administration announced the employer mandate delay, it said its decision resulted from business complaints about complex reporting requirements.

What it didn't say is it would cost as much as $10 billion in lost revenues, which is how much the CBO expected in fines from companies that didn't provide health benefits to workers that first year.

In addition, experts believe the delay will push more people into the subsidized exchanges, which could add as much as $5.3 billion in taxpayer costs, according to an analysis by the Committee for a Responsible Federal Budget.

Meanwhile, the Obama administration has also been putting off steep cuts to the Medicare Advantage program, which were supposed to help cover ObamaCare costs.

Medicare Advantage lets seniors choose from an array of private health plans, with premiums largely paid by Medicare. About 28% have enrolled in one of these plans.

Obama has been critical of Medicare Advantage, saying it provided "unwarranted subsidies" that "pad their profits but don't improve the care of seniors." And ObamaCare planned to squeeze $136 billion out of it between 2010 and 2019.

But just as these cuts were set to bite, the administration started handing out $8.35 billion in "quality improvement" bonuses to Advantage companies, under the guise of a "demonstration project."

The bonuses eliminated most of the scheduled cuts in 2012, according to the Government Accountability Office, which also challenged the claim that it was a legitimate demonstration project. That led to charges that Obama was just postponing the cuts to avoid upsetting seniors in an election year.

Earlier this year, his administration again reversed course on Medicare Advantage cuts, turning a planned 2.3% reduction in payments for 2014 into a 3.3% increase. Regulators claimed the payment boost resulted from a new methodology, but the change came after a flurry of protests from industry and lawmakers.

CLASS Dismissed

And in October 2011, Obama jettisoned an ObamaCare program, called CLASS, that was supposed to provide subsidized long-term care insurance for seniors.

Because CLASS collected premiums for years before paying any benefits, it appeared to cut ObamaCare's costs by $72 billion in the first 10 years.

That decision, however, vaporized more than half of ObamaCare's promised deficit cuts.

After accounting for all these changes, along with overall changes in the CBO's cost projections, the law is now on track to add to the federal deficit in the first 10 years, albeit by a relatively small amount.

Supporters argue that even with these changes ObamaCare is still cutting deficits because it's lowering health spending and improving efficiency, and these savings will grow over time as deeper Medicare cuts and bigger tax bills kick in.

But a January report from the Government Accountability Office found that claims of long-term ObamaCare deficit cuts are based on dubious cost-saving assumptions that several independent agencies "expressed concerns about."

After factoring those out, the GAO found ObamaCare will add to deficits over the next 75 years. Using the GAO report's findings, Sen. Jeff Sessions, R-Ala., calculated this increase to be $6.2 trillion.

This story has been updated to more accurately reflect the source of the $6.2 trillion deficit figure.

In September 2009, President Obama promised the country that "I will not sign a plan that adds one dime to our deficits — either now or in the future."

But it turns out Obama did sign such a plan — in fact, ObamaCare could add upwards of 180 billion dimes to the deficit in its first 10 years, an IBD analysis of various official budget reports found.

According to the Congressional Budget Office's initial forecast made in March 2010, ObamaCare was supposed to cut the deficit a total of $124 billion in its first decade. Democrats seized on this to show Obama had lived up to his promise.

Almost as soon as Obama signed the law, however, his administration started making changes that added costs and cut revenues. The most recent was the one-year delay in the employer mandate.

The result is instead of a $124 billion deficit cut from 2010 to 2019, ObamaCare will likely add about $18 billion in red ink over those same years. And that assumes nothing else changes in the years ahead.

Costly Delays

When the administration announced the employer mandate delay, it said its decision resulted from business complaints about complex reporting requirements.

What it didn't say is it would cost as much as $10 billion in lost revenues, which is how much the CBO expected in fines from companies that didn't provide health benefits to workers that first year.

In addition, experts believe the delay will push more people into the subsidized exchanges, which could add as much as $5.3 billion in taxpayer costs, according to an analysis by the Committee for a Responsible Federal Budget.

Meanwhile, the Obama administration has also been putting off steep cuts to the Medicare Advantage program, which were supposed to help cover ObamaCare costs.

Medicare Advantage lets seniors choose from an array of private health plans, with premiums largely paid by Medicare. About 28% have enrolled in one of these plans.

Obama has been critical of Medicare Advantage, saying it provided "unwarranted subsidies" that "pad their profits but don't improve the care of seniors." And ObamaCare planned to squeeze $136 billion out of it between 2010 and 2019.

But just as these cuts were set to bite, the administration started handing out $8.35 billion in "quality improvement" bonuses to Advantage companies, under the guise of a "demonstration project."

The bonuses eliminated most of the scheduled cuts in 2012, according to the Government Accountability Office, which also challenged the claim that it was a legitimate demonstration project. That led to charges that Obama was just postponing the cuts to avoid upsetting seniors in an election year.

Earlier this year, his administration again reversed course on Medicare Advantage cuts, turning a planned 2.3% reduction in payments for 2014 into a 3.3% increase. Regulators claimed the payment boost resulted from a new methodology, but the change came after a flurry of protests from industry and lawmakers.

CLASS Dismissed

And in October 2011, Obama jettisoned an ObamaCare program, called CLASS, that was supposed to provide subsidized long-term care insurance for seniors.

Because CLASS collected premiums for years before paying any benefits, it appeared to cut ObamaCare's costs by $72 billion in the first 10 years.

That decision, however, vaporized more than half of ObamaCare's promised deficit cuts.

After accounting for all these changes, along with overall changes in the CBO's cost projections, the law is now on track to add to the federal deficit in the first 10 years, albeit by a relatively small amount.

Supporters argue that even with these changes ObamaCare is still cutting deficits because it's lowering health spending and improving efficiency, and these savings will grow over time as deeper Medicare cuts and bigger tax bills kick in.

But a January report from the Government Accountability Office found that claims of long-term ObamaCare deficit cuts are based on dubious cost-saving assumptions that several independent agencies "expressed concerns about."

After factoring those out, the GAO found ObamaCare will add to deficits over the next 75 years. Using the GAO report's findings, Sen. Jeff Sessions, R-Ala., calculated this increase to be $6.2 trillion.

This story has been updated to more accurately reflect the source of the $6.2 trillion deficit figure.

See Also

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With ObamaCare's second-year sign-up period now in overtime, it looks like paid enrollment will — barring a miracle — finish even further short of forecasts than it did in 2014. Even assuming that the 11.4 million sign-up figure announced with fanfare by the Obama administration grows ...

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